Market Roundup
• Trump economic adviser says U.S. wants serious trade talks with China.
• Trump adviser eyes entitlement cuts to plug U.S. budget gaps.
• US Sep NY Fed Manufacturing, 19.00, 25.60 previous, 23.00 forecast.
• Argentina makes 'important progress' in IMF loan talks, peso inches up .
• UK PM May tells rebels: It's my Brexit deal or no deal.
• Canadian PM says will stand up for dairy industry at NAFTA talks.
• CA Jul Securities Cdns C$, 13.13B, 11.25B previous
• CA Jul Securities Foreign C$, 12.65B, 11.55B previous, 10.30B revised.
• Canadian home sales rise in August from July –CREA.
Looking Ahead - Economic Data (GMT)
• 18 Sep 01:30 Australia Q2 Home Price Index, -0.7% previous.
• 18 Sep 03:00 New Zealand Aug RBNZ Offshore Holdings, 56.5% previous.
Looking Ahead - Events, Other Releases (GMT)
• NA Bank of Japan holds Monetary Policy Meeting (to September 19) in Tokyo.
• 07:00 ECB policymaker and French central bank governor Francois Villeroy de Galhau speaks at a conference in Paris.
• 07:15 ECB President Mario Draghi speaks at a conference in Paris.
• 07:30 ECB supervisory head Daniele Nouy chairs a panel at a financial regulation conference in Paris.
• 08:00 Riksbank First Deputy Governor Kerstin af Jochnick will participate in a conference arranged by Moody's.
Currency Summaries
EUR/USD is likely to find support at 1.1613 levels and currently trading at 1.1677 levels. The pair has made session high at 1.1698 and hit lows at 1.1676 levels. The euro strengthened against dollar on Monday as expectations grew that Britain would reach a deal with the European Union on the terms of its departure from the bloc.Talks between the European Union and Britain on Brexit are being conducted in a spirit of "good cooperation," Michel Barnier, the EU's chief negotiator on the issue, said on Monday. Despite Barnier's upbeat mood, there is, so far, no full exit agreement and some rebels in British Prime Minister Theresa May's Conservative Party have threatened to vote down a deal if she clinches one with the EU. Barnier was in Madrid to brief Spanish Prime Minister Pedro Sanchez and Foreign Minister Josep Borrell on the progress in the Brexit negotiations. A Spanish government source said Barnier would also discuss Gibraltar, a British territory on Spain's southern coast which will leave the EU along with the UK on March 29 next year. Britain is due to leave the EU on March 29, 2019 but no full exit agreement has been reached. The first of three summits on the terms of Brexit will be held this week, and EU leaders hope a deal can be struck by November.
GBP/USD is supported in the range of 1.3082 levels and currently trading at 1.3160 levels. It reached session high at 1.3163 and dropped to session low at 1.3131 levels. Sterling rose against the dollar on Monday as pound was helped by a weaker dollar and reports of progress on the Irish border question, an obstacle to Brexit diplomats will try to overcome this week at a European Union summit. The United Kingdom is due to leave the EU on March 29 but no full exit agreement has been reached and some rebels in Prime Minister Theresa May's Conservative Party have threatened to vote down a deal if she clinches one. But sterling has benefited recently from reports on behind-the-scenes efforts to work out how to manage the Irish border if Britain also leaves the single market and customs union.A report published by The Times on Monday said EU chief negotiator Michel Barnier is working on a plan to minimise physical checks at the border between the two Irelands by tracking goods using barcodes on shipping containers. Sterling was last trading up 0.6 percent against dollar at $1.3157, its highest since August. It was flat against the euro at 88.91 pence. The pound has reversed nearly all its losses against the dollar in August, when fears of a no-deal Brexit surged and last week it gained 1.2 percent.
USD/CAD is supported at 1.2972 levels and is trading at 1.3030 levels. It has made session high at 1.3039 and lows at 1.3001 levels. The Canadian dollar edged lower against its U.S. counterpart on Monday, paring some of its early gains despite higher oil prices, as trade feud with the United States weighed on risk appetite. The price of oil, one of Canada's major exports, rose as investors focused on the impact of U.S. sanctions on Iran despite assurances by Washington that Saudi Arabia, Russia and the United States could together raise output fast enough to offset falling supplies. The U.S. dollar gave up early gains and fell while emerging market currencies slipped nearly half a percent as investors waited for the next salvo in the trade war between the United States and China. Canada runs a current account deficit, so its economy could be hurt if the global flow of trade or capital slows. The country has its own trade feud with the United States and is also in talks to revamp the North American Free Trade Agreement. The Canadian dollar was trading 0.2 percent at 1.3029 to the greenback. The currency, which rose nearly 1 percent last week, traded in a range of 1.3008 to 1.3048.
AUD/USD is supported around 0.7139 levels and currently trading at 0.7185 levels. It hit session high at 0.7195 and made session lows at 0.7176 levels. The Australian dollar held near 2-1/2 year lows against dollar on Monday as global trade concerns took centre stage once again amid fears of a souring relationship between the United States and China. The Australian dollar, often traded as a liquid proxy for global growth and Chinese assets, was last at $0.7178. It fell as low as $0.7085 last week, a level not seen since early 2016.The currency has been battered in recent months as U.S. tariff threats became a reality. The Aussie is among the worst-performing major currencies in the developed world so far this year, having tumbled 8.6 percent. U.S. President Donald Trump is likely to announce the new tariffs on $200 billion of Chinese imports as early as Monday. The tariff level will probably be about 10 percent, the Wall Street Journal reported, below the 25 percent the administration had said it was considering. The WSJ also reported that China may decline to attend trade talks expected this month as Beijing won't negotiate under threat.
Equities Recap
European shares recovered from a weak start on Monday and closed in positive territory after a choppy session amid reports U.S. President Trump plans new 10 percent tariffs on $200 billion of Chinese imports..
The UK's benchmark FTSE 100 closed down by 0.1 percent, FTSEurofirst 300 ended the day up by 0.06 percent, Germany's Dax ended down by 0.2 percent, and France’s CAC finished flat.
U.S. stocks fell on Monday led by declines in Apple and Amazon as investors took profits ahead of President Donald Trump's expected announcement of new tariffs on $200 billion of Chinese imports.
Dow Jones closed down by 0.35 percent, S&P 500 ended down 0.55 percent, Nasdaq finished the day up by 1.42 percent.
Treasuries Recap
U.S. long-term Treasury yields inched up on Monday but came off four-month highs as investors returned to buy government debt after key technical levels were hit as global trade uncertainty persisted.
The U.S. 10-year yields were last at 2.992 percent, from 2.994 percent late on Friday.U.S. 30-year yields were at 3.135 percent , from Friday's 3.132 percent. On the short end, U.S. 2-year yields last traded at 2.782 percent , unchanged from Friday.
Commodities Recap
A softer dollar and short-covering lifted gold on Monday after two sessions of declines, but investors braced for more U.S.-China trade tensions, with some buying bullion as a safe haven.
Spot gold was up 0.7 percent at $1,201.01 an ounce by 1:37 p.m. EDT (1737 GMT), after hitting a 5-day low of $1,192.57 and falling 0.6 percent on Friday, when it marked its third straight weekly decline. U.S. gold futures for December delivery settled up $4.70, or 0.4 percent, at $1,205.80 per ounce.
Oil prices were little changed on Monday as the market weighed deepening trade tension between the U.S. and China that is expected to dent global crude demand and potential supply tightening due to Iran sanctions.
Brent crude futures dipped 4 cents to settle at $78.05 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 8 cents to settle at $68.91 a barrel.
